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London Welcomes the Tech Set and Its Money

By Mark Scott June 15, 2014 7:01 pmJune 15, 2014 7:01 pm

Photo

The V.I.P. treatment for the likes of Michael R. Bloomberg, the former New York City, coincides with a week of tech events, meetings and parties to highlight London’s growing tech scene.Credit Ruth Fremson/The New York Times

LONDON – From hipster hangouts in East London to corporate headquarters in West London, the British capital will roll out the red carpet this week for many of the world’s leading tech entrepreneurs and investors.

The V.I.P. treatment for the likes of Michael Moritz, a partner at Sequoia Capital, and Michael R. Bloomberg, the former mayor of New York City, coincides with a week of events, meetings and parties intended to highlight London’s growing reputation as one of Europe’s leading technology centers.

More than 30,000 people are expected to attend​ roughly 200 events at London’s inaugural tech week​, focusing on topics like venture capital investment, how to expand in international markets and other topics that have attracted a growing pool of developers and engineers from around the world to Britain’s bustling metropolis.

‘‘We want to showcase London as a crossroads for anyone interested in technology,’’ said Kit Malthouse, the deputy mayor for business and enterprise, who hopes the event will become a yearly excuse for the world’s tech leaders to visit the city. ​ ‘‘We’re not trying to compete with Silicon Valley. We want to add value to what’s going here in London.’’

While California still dwarfs London and its tech ambitions, the city has scored recent successes that local venture capitalists and entrepreneurs hope will spur more investment in the London tech sector.

That includes the multibillion-dollar initial public offering of King Digital Entertainment, the company behind the Candy Crush game franchise. The company, whose shares have fallen 22 ​ percent​ since it listed in March, was founded in Sweden but has a major office in central London. And despite its lackluster share performance, King’s I.P.O. on the New York Stock Exchange has given hope to other tech companies that they, too, can eventually create a publicly traded company.

‘‘Month after month, we’re seeing a pipeline of exits,’’ said Russ Shaw, an American who founded a London-based advocacy group to raise awareness of the city’s tech community.

The city hopes to attract more companies like King, allowing it to reduce its reliance on the financial services industry, which still represents almost a quarter of the local economy, according to government statistics.

After a flurry of scandals that have tarnished a number of major British banks, London’s policy makers have played up the city’s tech scene, hoping to tap into a global interest in the latest gadgets and smartphone applications.

With or without the British government’s help, however, London has become one of Europe’s leading tech communities. In 2013, the city’s technology companies received almost $800 million in investment, outpacing other tech hubs like Berlin, Stockholm and Tel Aviv, according to the data provider Dow Jones Venture Source.

The investment has centered on consumer start-ups like game companies, as well as fashion- and advertising-related start-ups. In total, the city’s technology and information industries now employ 382,000 people, an 11 percent increase from 2009, according to Boston Consulting Group.

Local entrepreneurs also have flourished in so-called FinTech start-ups that have links to city’s financial services industry. That includes the foreign exchange company TransferWise, which raised $25 million last week from investors including Peter Thiel, a co-founder of PayPal, and the British billionaire Richard Branson.

‘‘London’s lead as a FinTech hub continues to grow,’’ said Taavet Hinrikus, an Estonian who started TransferWise in London in 2010.

While London’s tech sector will open its door to international guests this week, there remain many skeptics, particularly from Silicon Valley, who say they doubt whether the next Facebook or Google will be created in the British capital.

Countries including Israel and Finland still ranked significantly higher than Britain in the per-capita value of tech deals (either I.P.O.’s or acquisitions by larger companies) in 2013, according to the Internet DealBook, an online database.

‘‘Every executive who knows how to build a $5 billion-plus company is in Silicon Valley,’’ said Ben Horowitz, an American venture capitalist who has backed tech giants like Facebook, Twitter and Groupon. ‘‘It’s a big advantage. Tech companies are global, and Silicon Valley is the best place to build a business.’’